Indonesia

Capital Markets, Listed Entities & M&A

General Meeting of Shareholders Goes Online

In light of the approaching deadline for public companies to hold their annual GMS, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or "OJK") issued two new regulations this week on general meeting of shareholders ("GMS") of public companies, namely OJK Regulation No. 15/POJK.04/2020 ("POJK 15") and OJK Regulation No. 16/POJK.04/2020 ("POJK 16"). POJK 15 and POJK 16 allow public companies to hold their GMS virtually ("e-GMS") through an e-GMS system provided by an e-GMS provider.

In addition, both regulations enable the granting of an electronic proxy ("e-Proxy") through the e-GMS system. While AHP has discussed the e-proxy mechanism in its previous client update, certain provisions have been adjusted in POJK 16 to facilitate the implementation of the e-GMS better.

Indonesian Government Begins Easing Rules in Light of COVID-19

In light of the spread of  the Covid-19 outbreak, on 18 March 2020, the OJK, Indonesia's Financial Services Authority, relaxed the rules on submission of reports and holding of general meeting of shareholders for public companies. Under OJK Letter No. S-92/D.04/2020 ("Letter"), OJK not only extends the deadline for the submission of several reports, including annual reports and financial statements, but also touches upon the holding of a general meeting of shareholders ("GMS") via an e-proxy.

Market Condition Pushes the OJK to Relax Buyback Procedures

Indonesia's financial services authority, Otoritas Jasa Keuangan or "OJK", recently issued a circular that allows all issuers or public companies to conduct a buyback of shares without convening a general meeting of shareholders. 

In OJK Circular Letter No. 3/SEOJK.04/2020 on Other Conditions as Significantly Fluctuating Market Conditions in the Implementation of Shares Buyback by Issuers or Public Companies ("Circular"), the OJK states that the trading condition in the Indonesia Stock Exchange (IDX) has experienced significant pressure as evidenced by the decline in the Composite Stock Price Index (IHSG) by 18.46% from the beginning of 2020 until the date of the Circular. The economy is also slowing down due to regional and national pressure, including as a result of the COVID-19 outbreak. 

The revision to the buyback procedure is an attempt by the government to provide economic stimulus to the market and at the same time reducing the adverse impact from the current market condition.

Competition & Antitrust

KPPU Announces Relaxing of Competition Law Enforcement

In light of the current health crisis and as detailed in our previous client update (click here  to read), the Chairman of the Indonesia Competition Commission ("KPPU") has expressed his support for businesses to collaborate. Subsequently, on 9 November 2020, the KPPU published KPPU Regulation No. 3 of 2020 on the Relaxation of Legal Enforcement of Monopoly Practices and Unfair Business Competition and Monitoring of Partnership Implementation to Support the National Economic Recovery to specify the criteria and form of relaxation in its enforcement.

Under the new regulation, businesses can now benefit from the following relaxation:

1. procurement using State Budget or Regional Budget can be done to: (i) fulfil medical needs or provide supporting facilities to handle Covid-19, e.g. the procurement of medicine, vaccine, construction of emergency hospitals, the appointment of hotels or buildings for isolation, and other medical needs and supporting facilities to handle Covid-19; and (ii) distribute social assistance and social safety net from the government to the public;;
2. approval of an agreement, activity, and/or the use of dominant position to handle Covid-19 and/or to increase the economic ability of a business;
3. extension of the deadline to submit the mandatory post-closing notification to the KPPU from 30 to 60 business days as of the effective date; and
4. extension of the period of written warning in the partnership monitoring procedure from 14 to 30 business days.

    

OMNIBUS LAW 2020: The Omnibus Law Removes Cap on Fines for Competition Law Violations

This is the third edition of the "Omnibus Law 2020: Overview Series", which highlights changes in the competition sector.

With the spotlight on sensitive items such as employment, the Indonesian Government, through the Omnibus Law, has also introduced changes to the Competition Law (Law No. 5 of 1999).

Key changes include the removal of the cap on fines and criminal sanctions for competition law violations, as well as the introduction of a new procedure when lodging an appeal in a competition case.

Is there Room for Cartel and Collaboration in the New Normal?

Among the many devastating impacts, the COVID-19 outbreak has demonstrated how a pandemic can have a significant and adverse effect on economic activities, both from supply and demand perspectives. Market distortion, disruption of supply-chain and increasing demand for various healthcare products and services are among the main issues sparked by the pandemic.

In responding to these issues, businesses might have contemplated certain collaborative measures to aid in alleviating shortage, ensuring that the public receives reliable supply, helping themselves survive, and even achieve efficiency. However, businesses must be aware that the implementation of those joint measures are not without potential legal implications as they may be recognised as anti-competitive conduct under Indonesian Competition Law.

AHP recently held a webinar on this topic, with Mr. Kurnia Toha, the Chairman of the Indonesia Competition Commission (KPPU), as one of the panellists. This Update sets out the key takeaways from the webinar on any collaborative business measures, particularly those taken during the pandemic.

Control Measures

Government Cuts Red Tape to Pave the Way for Covid-19 Vaccine

As seen from the many regulations issued since the declaration of COVID-19 as a public health emergency, the Indonesian government has been rolling out various measures to protect the country and its citizens. Most recently, the government issued Presidential Regulation No. 77 of 2020 on the Procedures to Implement Patents by the Government ("New Regulation"), which is the implementing regulation of Law No. 13 of 2016 on Patents.

In the past, the procedure to implement patents by the government was governed by Government Regulation No. 27 of 2004 (“Regulation No. 27 of 2004”) as mandated by the old patent law (Law No. 14 of 2001 on Patent). Pursuant to Regulation No. 27 of 2004, the government then issued Presidential Regulation No. 76 of 2012 on the Implementation of Patent by the Government for Antiviral and Anti-Retroviral Medicines, which was enacted to meet the urgent demand and need for antiviral and anti-retroviral medicines to treat HIV/AIDS and Hepatitis B.

In light of the current pandemic, the New Regulation aims to eliminate bureaucratic red tapes to ensure that when a COVID-19 vaccine becomes available, the government can immediately implement the patent.  Under the New Regulation, the government can implement a patent if the patent relates to Indonesia's national defence and security or in the event of an urgent public needs, which includes the need for pharmaceutical or biotechnological products that may potentially be expensive or necessary to treat diseases that can adversely affect the general rate of mortality.

AHP Covid-19 Dispatch

As countries around the world work to tackle the spread of Covid-19, the threat of business interruption has become real, throwing arrangements into disarray, disrupting workforce, and upsetting the global economy.

In Indonesia, the government has begun issuing various countermeasures and relief for businesses and public alike. In this update, we provide a summary of legislation and government updates issued to navigate the Covid-19 outbreak, specifically on the following areas:

1. Banking and Finance
2. Disputes Resolution
3. Tax and Custom

AHP Covid-19 Dispatch

As countries around the world work to tackle the spread of Covid-19, the threat of business interruption has become real, throwing arrangements into disarray, disrupting workforce, and upsetting the global economy.

In Indonesia, the government has begun issuing various countermeasures and relief for businesses and public alike. AHP Covid-19 Dispatch provides a summary of legislation and government updates issued to navigate the Covid-19 outbreak.

Covid-19 Response: Between Lockdown, Quarantine and Massive Social Restriction

For the last couple of weeks, the term 'lockdown' has been frequently mentioned both in official media, as well as social media. Some argue that it will be the most pressing and effective action to prevent viruses spread; others appeal to take a closer look as it may adversely affect state economy and livelihood of workers in the informal economy.

Perhaps unknown by many, the government had issued a law on health quarantine (Law No. 6 of 2018 on Health Quarantine) in 2018. This law regulates various types of actions, including massive social restriction and quarantines that can be taken by the government in preventing the spread of a disease and/or any health risk.

Corporate Matters & Business Impact

OMNIBUS LAW 2020: How the Omnibus Law Will Simplify Investment in Indonesia

This is the fourth edition of the "Omnibus Law 2020: Overview Series", which highlights changes in the investment sector. 

Many hoped that investing in Indonesia will be simpler for investors after the Omnibus Law becomes effective. One of the ways in which the Omnibus Law seeks to simplify investment in Indonesia is by maximising the potential of the One Stop Service ("OSS") system. Despite being in operation since 2018, the OSS still operates in conjunction with manual licensing application or process. Investors often have to juggle both processes to achieve the desired outcome. 

Dispute Resolution

BANI Moves to Arbitration Online

At the height of the Coronavirus crisis in March 2020, the Indonesian National Arbitration Board or BANI issued Decree No. 20.007/III/SK-BANI/HU, temporarily suspending all arbitration proceedings in BANI in an effort to contain the outbreak. As the government and businesses are starting to assess the 'new normal,' BANI has revoked the March decree and issued Decree Number 20.015/V/SK-BANI/HU on the Rules and Procedures for Electronic Arbitration (“Decree”). Under the Decree, arbitrations can now be held or continued online by using an electronic telecommunication platform, provided the parties observe the arbitration principles applicable in BANI.

What is worth noting in the Decree is that it is applicable beyond the current health crisis, thus allowing an arbitration proceeding to proceed virtually in the event of a disaster, emergency, or any other exceptional circumstances.

The ability to move an arbitration online applies not only to new and ongoing arbitrations, but to situations where parties intend to submit a statement of claim. Given this, the Decree may effectively change the way arbitrations are conducted in Indonesia going forward.

General

AHP Covid-19 Dispatch

As countries around the world work to tackle the spread of Covid-19, the threat of business interruption has become real, throwing arrangements into disarray, disrupting workforce, and upsetting the global economy.

In Indonesia, the government has begun issuing various countermeasures and relief for businesses and public alike. In this update, we provide a summary of legislation and government updates issued to navigate the Covid-19 outbreak, specifically with respect to the following areas:

i. Dispute Resolution: Jokowi Declares Covid-19 as a National Disaster: A Force Majeure Trigger?

ii. Technology, Media & Telecommunications: Highlighting Indonesia's E-Signature Framework in Times of Covid-19

AHP Covid-19 Dispatch

As countries around the world work to tackle the spread of Covid-19, the threat of business interruption has become real, throwing arrangements into disarray, disrupting workforce, and upsetting the global economy.

In Indonesia, the government has begun issuing various countermeasures and relief for businesses and public alike. In this update, we provide a summary of legislation and government updates issued to navigate the Covid-19 outbreak, specifically on the following areas: 

1. Dispute Resolution
2. Capital Markets
3. Competition
4. Tax and Customs
   

AHP Covid-19 Dispatch

As countries around the world work to tackle the spread of Covid-19, the threat of business interruption has become real, throwing arrangements into disarray, disrupting workforce, and upsetting the global economy.

In Indonesia, the government has begun issuing various countermeasures and relief for businesses and public alike. AHP Covid-19 Dispatch provides a summary of legislation and government updates issued to navigate the Covid-19 outbreak. In this Update, we review the circular letter from the Ministry of Land Affairs (Kementerian ATR-BPN) requiring certain land-related services to be done online, and its potential impact to the current condition of land filings.

Support Measures

OMNIBUS LAW 2020: Overview Series

On 5 October 2020, the Legislation Body of the House of Representatives of the Republic of Indonesia (“DPR”) and the Indonesian government agreed to pass the Omnibus Bill on Job Creation, commonly known as the Omnibus Law. The bill is a breakthrough effort by the government to comprehensively amend 76 sectoral laws and amend or revoke hundreds of regulations to create job opportunities and improve Indonesia’s investment ecosystem.

The bill will be delivered to the President within seven days after the date of the plenary meeting at DPR on 5 October 2020. The President is expected to sign the bill into law, failing which, it will automatically become law within 30 days after the draft bill is jointly agreed by the President and DPR.

The Omnibus Law is by far the most ambitious and complicated piece of legislation in Indonesia, covering many sensitive areas, such as employment, that previous governments have refused to touch. It consists of 15 chapters and 186 articles, spanning over 900 pages. It mainly covers the following:

1. investment growth and licensing leniency;
2. protection and enforcement of small-medium scale enterprises and cooperative;
3. employment;
4. research and innovation;
5. ease of doing business;
6. land procurement;
7. economic area;
8. central government investment and national strategic projects;
9. government administration; and
10. sanctions.

The Urge to Merge: OJK Regulations Encourages Merger Between Banks

Following the enactment of Government Regulation in lieu of Law No. 1 of 2020, Indonesia's financial services authority, the OJK, has enacted several regulations designed to safeguard the stability of the financial system and deal with the threat of an economic crisis.

In this update, we will discuss OJK Regulation No. 18/POJK/03/2020 on Written Order to Handle Problematic Banks ("POJK 18/2020") and OJK Regulation No. 12/POJK.03/2020 on the Consolidation of Commercial Banks ("POJK 12/2020") in the context of the banking sector. While POJK 18/2020 was issued in the context of the current coronavirus crisis, POJK 12/2020 has been on OJK's radar before the pandemic.

Control and Support Measures in Indonesia Amid the COVID-19 Pandemic

The Indonesian government’s response to the COVID-19 pandemic has been steadily intensifying in the past weeks. Pursuant to Regulation of the DKI Jakarta Governor No. 33 of 2020 and Decree No. 380 of 2020, Jakarta became the first province in Indonesia to impose massive social restriction. This is evidenced by the closing of schools, offices except for those conducting essential services) and places of worship, passenger’s limitation for public and personal transportation and prohibition of mass gathering. By mid-April, President Joko Widodo declared COVID-19 as a non-natural national disaster, which obliges the governors, regents, and mayors of the various regions in Indonesia to establish policies in line with this declaration. West Java and Tangerang soon followed Jakarta’s lead and declared a massive social restriction in their respective regions.

On the business side, the government has begun setting the stage to allow public institutions to introduce future measures to ensure that business can go on as usual.

Trade

Indonesia Temporarily Halts Export of Masks and Medical Protective Equipment

Following the announcement from the World Health Organization that declared Covid-19 as a pandemic, the Indonesian government continues making adjustment and taking steps to deal with the outbreak. As of 23 March 2020, there were 579 confirmed COVID-19 cases, with 49 deaths and 30 recovery. Globally, the pneumonia-like illness has infected more than 330,000 people and taken at least 14,000 lives. 

Amidst this outbreak, the Indonesian Central Statistics Agency noted an increase in the export of protective masks from Indonesia to trading partner countries by an average of 3,000% during February 2020. Given that Indonesia is currently suffering from a shortage of protective masks due to panic buying and an increase of price, the Indonesian government issued the Minister of Trade Regulation No. 23 of 2020 on the Temporary Ban of Export of Antiseptics, Raw Materials for Masks, Personal Protective Equipment and Masks on 17 March 2020 ("Regulation") prohibiting the export of antiseptics, raw materials for masks, personal protective equipment and masks that fall under specified Tariff Post/Harmonized System.

The temporary ban of export started on 18 March 2020 and will end on 30 June 2020. Non-compliance with the Regulation will subject the errant exporters to sanctions provided for by the prevailing laws and regulations.

Workplace & Employment

OMNIBUS LAW 2020: Finding a New Equilibrium in Indonesia's Employment Law?

This is the second edition of the "Omnibus Law 2020: Overview Series", which highlights changes in the employment sector.

In Indonesia, as in many other countries, employment law is often a sensitive issue, and past governments have shied away from resolving issues surrounding employment. With the enactment of the Omnibus Law, various provisions of the current Labour Law (Law No. 13 of 2003) that are deemed to be "too restrictive" or "too difficult" are either removed entirely or updated.

The provisions that are being updated by the Omnibus Law include provisions on termination of employment, compensation for termination of employment, minimum wage, outsourcing, fixed-term employment, work permit for expatriates, and the establishment of a new social security program called the loss of employment security program.

Useful Resources

COVID-19 Accelerated Handling Task Force (National Disaster Management Authority)

Infeksi Emerging (no English version)

Region: Jakarta